At Commonwealth Insurance Services, we prioritize keeping everyone informed about industry trends that can impact your insurance needs. Since 2020, the severity of auto claims has increased significantly with no signs of slowing down. This trend affects everyone from insurance providers to policyholders. Here’s what you need to know.
The Numbers Tell the Story
Recent data highlights a sharp rise in the costs associated with auto claims. The average severity of auto claims has climbed steadily, driven by various factors. The costs of parts, labor, and rental cars have all seen substantial increases.
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Parts and Labor Costs: The cost of parts has increased by 12% and labor by 10% since 2020.
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Rental Car Costs: Rental car costs have surged by 15% due to longer repair times and higher demand.
Why Are Costs Rising?
Several key factors contribute to this upward trend:
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Parts and Labor: Modern vehicles are equipped with advanced technology, making repairs more complex and expensive. The cost of replacement parts has surged, and skilled labor is in high demand.
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Rental Cars: With repair times extending due to the complexity of modern vehicles, the demand for rental cars has grown. This has led to higher rental car costs, further driving up claim severity.
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Economic Factors: Inflation and supply chain disruptions have also played a role, impacting the overall cost of vehicle repairs.
What This Means for You
As claim severity rises, it directly affects insurance premiums. Insurers need to adjust rates to keep up with the increasing costs, which can result in higher premiums for policyholders. It’s essential to understand that these changes are a reflection of broader economic and industry trends.
How to Stay Protected
At Commonwealth Insurance Services, we are committed to ensuring you’re adequately protected. Here are a few steps you can take:
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Review Your Coverage: Make sure your auto insurance policy provides sufficient coverage for potential increases in claim costs.
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Consider Comprehensive Coverage: Comprehensive coverage can protect against non-collision-related damages such as theft or natural disasters, which are also on the rise.
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Stay Informed: Keep an eye on industry trends and how they might affect your insurance needs. We’re here to help you navigate these changes and find the best coverage options.
The increase in auto claim severity is a significant trend that impacts all drivers. By staying informed and reviewing your insurance coverage, you can ensure you’re prepared for these changes. If you have any questions or need assistance with your policy, don’t hesitate to reach out to us at 502-813-5436.
Source: Based on information from the BIG i article
Auto Claims Severity Up Significantly Since 2020 With No Sign of SlowingAuto Claims Severity Up Significantly Since 2020 With No Sign of Slowing (iamagazine.com)
